When you decide you want to buy a new shirt or a new dress. You go online and check several options. With several apps and websites that are selling dressing, your pool to choose from is bigger than ever before! Having so many choices is definitely a privilege but it is also making it more difficult to choose one. Having several choices has given rise to a whole new kind of impulsive and indecisive buyers. The same goes for the business world, say you are hiring a software engineer for your company. You will get hundreds of candidates on LinkedIn. The more choices you have, the more confused you are likely to be while choosing the best candidate, clothes, food, or anything. We live in a world where we are constantly bombarded with options, choices, and replacement. This makes the skill of decision-making worth harnessing now more than ever.
Decision-making is a mental process and must-have business skill. A survey conducted by the Harvard Business Review in 2010 found that there is a correlation between decision-making and financial results 95 per cent of the time. The companies that have great decision-making skills tend to perform better than their competitors.
Different styles of decision-making
There are different ways to go about effectively making business decisions. Each and every entrepreneur has his own style and way of thinking. Though overall the way decisions are made can be divided into three vast categories:
You can't make decisions based on fear and the possibility of what might happen.
- Michelle Obama
A psychological decision is clearly subjected to how an individual feels. It depends upon what are his or her needs, preferences, mindset, ethics and perspective. It totally revolves around an individual making all the decisions.
A cognitive system is one where the decision maker and the ones who will be impacted by those decisions function collectively in an integrated manner. Here the decisions are discussed, assessed, and suggestions are made accordingly. The decision is open for discussion as reactions and suggestions are received.
This method is usually how group discussions go about in an organisation. Obviously, when there are so many people involved in decision-making, communication is the key. Here the organisational norms and logical discussions are the key part of the process.
The seven-step process of decision-making
The go with the flow mindset does not fit quite well in the business world. Every crucial step of an organisation is well-planned and decided before implementing it. There are several ways you can make a decision regarding your business. The most sought-after way to go about it being –
What are you deciding about?
Before beginning the process, it is vital to know what you are deciding about. There should be clarity regarding what a decision needs to be made. If you fail to understand clearly the setback or the opportunity, the decision you make about it might probably not be the best.
Be well-informed about it
The best decisions are the ones that are well-informed. Once you know regarding what you are making a decision, gather all the data about it. Suppose you are deciding whether or not you need to hire an accountant for your startup. Think about how the current accounts are being handled by you or your manager.
Analyse how hiring an accountant will make a difference or is it basic calculations and it can be managed without any professional help. Then consider the amount you will be spending hiring a new accountant. There are plenty of things to know and consider while making your decision. After all the considerations, the pros and cons and the long-term impact assessment, make the decision. The best decisions are the ones that are well-informed.
Look for alternatives
Businesses have constant requirements and needs. Consider what suits you better, hiring an accounting firm that manages your finances or an accountant. Look for hitting two stones with one bird by hiring tax and accounting consultants or firms that manage both your account and taxes. While making decisions, it is necessary to consider all the possible alternatives. As usually there are several ways to meet the same goal. Find the one that suits your business the best and offers value for time, efforts and money.
Analysing the multiple alternatives
Once you have jotted down several alternatives, start weighing them against each other. See what has worked for organisations in the past in a similar situation. Then see how you can do things differently and better. We keep weighing options against each other all the time. When you are hungry, the end goal is to feel full. Now you can either fill-up on the tasty junk or have a healthy meal, have a home-cooked meal or order takeaway. Depending upon the time you have for cooking, your food choices, your budget and your diet, you will end up factoring into your decision-making process.
Finally, the verdict is here!
After brainstorming and contemplating all the options and alternatives, the next step is making the decision. The decision you have made at this point is clearly impacted from all the steps above. Having clarity, gathering information, looking for alternatives and weighing them against each other is important to make the best possible decision. This method works in any and every decision-making crisis that a business comes across.
It is time for implementing the decision that you have made. Make a tangible plan based on your decision and start acting on it promptly. Assign tasks to all those who will work towards making your plan a reality. Proactively get started as a delayed action may lead to loss of opportunity. When college students are contemplating which colleges to apply for and are busy researching about the best colleges for them. The ineffective decision-makers usually miss the admission dates.
It’s review time
Once you have made the decision and implement it, observe how it performs. Are you happy with it? Are things going as you thought they would? Is everyone impacted by it satisfied with your decision? If the answer is a strong ‘yes’, the decision needs no alterations. However, if that answer is ‘no’, then conduct discussions, identify the setbacks and come up with solutions for the problem at hand.
Whenever you see a successful business, someone once made a courageous decision.
- Peter F. Drucker
Techniques for making decisions
Decision-making techniques help in reaching your goals more effectively and in turn produce better outcomes. Some of the best techniques worth considering are –
Be more process-oriented
When your job is not only to make the decisions but also getting it implemented through others, a process-oriented approach seems the best way to go about it. Having a process in place will have a set way of getting things done. You can also form a process involving the steps above that best suit your business.
Get your team together
When you alone are making a decision, you are likely to have a tunnel vision. Involving your team in the process will help you to view things from different perspectives. Bringing different ideas and viewpoints to the table will only lead to generating an effective decision.
Induce a collaborative mindset
While making any decisions in an organization, the mindset of everyone involved should be taken into account. Work on uplifting your employees and create a mindset where their inputs are taken seriously.
Also, the approach should be more towards making the best decision overall as a team rather than employees defending each other’s opinions and downplaying their weaknesses. Instead, the focus should be on collectively addressing the questions that stand while making decisions.
Create psychologically safe environment
In research done by Google, it was found that psychological safety is largely attributed among teams that perform well. It is obvious that a team where employees feel safe and respected will have better communication than the one where they feel they are condescended or ignored. A lot of great ideas will be thrown out of the window if employees don’t feel psychologically safe to share them.
Reiterate the goal behind the decision-making
Every decision that is made in an organisation is with a set goal in mind. A simple decision like framing the leave-policy of an organisation is with the goal to promote work-life balance for employees without hampering productivity. It is important to not lose sight of the goal while getting involved in the decision process. Keep revisiting the goal to remind the entire purpose of making the decision.
As an entrepreneur, decision-making is an integral part of your journey. Your business will evolve and so will your process and strategies. The challenges that come your way will only enhance your decision-making capabilities. Along with decision-making, problem solving skills also go a long way in making the best business decisions. Read our article on ‘problem solving’ to know more.